*The Dave Ramsey 'Baby Steps' Thread*

[barkley]

I'm always interested in other people's utility numbers. I live in the country so we don't have water, sewer, or gas out here. My house is all electric with a heat pump/central air. While I have a small house (1200 sq ft), it's poorly insulated. With two adults keeping the heat at 68 and the AC at 72, our monthly budget billing for our utilities is $114 a month. Some months it's much lower; it peaks around $200 a month in January and February. We live in Virginia so our electricity is controlled by the monopoly that is Dominion Power with no other electric options.

i'll share-

we are in the country as well so no water/sewage. our house is about 2300 sq. feet. we have a mix of electric and propane (fireplace and stove/oven are propane). we keep our thermostat at about 68 year round. we do a balanced payment plan on our electricity-non profit coop- which has not resulted in us ever having a balance due at the end of the year when they run the numbers (maybe a small credit) and it's currently at $255 per month. i budget $1500 per year for propane BUT a chunk of that gets used up by our generac generator b/c it's not uncommon for us to get at least 5 full days per year when it's running 24 hours per day. this winter has been so freaking cold we've used the fireplace allot more than usual.

 

[ThereYouSeeHer]

I'm always interested in other people's utility numbers. I live in the country so we don't have water, sewer, or gas out here. My house is all electric with a heat pump/central air. While I have a small house (1200 sq ft), it's poorly insulated. With two adults keeping the heat at 68 and the AC at 72, our monthly budget billing for our utilities is $114 a month. Some months it's much lower; it peaks around $200 a month in January and February. We live in Virginia so our electricity is controlled by the monopoly that is Dominion Power with no other electric options.

We are in a similar situation. No water, sewer, gas, HOA, trash, home phone, internet, or cable/dish TV (we use an indoor antenna for whatever free channels we can pick up). Although it's nice having only an electricity and cell phone bill (we hotspot off of this for internet), we need to start saving for future maintenance and replacement costs (well, septic, etc.). We save money in one area to spend it in another, I guess!

 

[DisneyMandC]

We are in a similar situation. No water, sewer, gas, HOA, trash, home phone, internet, or cable/dish TV (we use an indoor antenna for whatever free channels we can pick up). Although it's nice having only an electricity and cell phone bill (we hotspot off of this for internet), we need to start saving for future maintenance and replacement costs (well, septic, etc.). We save money in one area to spend it in another, I guess!

We do have trash, internet (sort of), and tv, which I bill out separately from utilities. So maybe Ramsey considers a lot of that lumped together under utilities? Which I don't. I split trash service with my mom. Even if you take your own trash to the dump here, you have to pay for it. I'm not going to go through the hassle of that and still have to pay when I could have someone pick it up for me. We have what is basically a verizon hotspot separate from our phones, but they are actually installing verizon fios in my area now! We have directv for tv.

 

[tzolkin]

The grocery numbers above are laughable.

I thought the grocery numbers were high, so maybe it is an accurate average for most families.

We are currently a family of 4 (two teens left at home) and spend about $600 a month on groceries. (I just checked my spreadsheet from 2022 and our grocery total was $6940, so that's $578 average per month.)

 

[ThereYouSeeHer]

We do have trash, internet (sort of), and tv, which I bill out separately from utilities. So maybe Ramsey considers a lot of that lumped together under utilities? Which I don't. I split trash service with my mom. Even if you take your own trash to the dump here, you have to pay for it. I'm not going to go through the hassle of that and still have to pay when I could have someone pick it up for me. We have what is basically a verizon hotspot separate from our phones, but they are actually installing verizon fios in my area now! We have directv for tv.

We have service providers adding lines to our area now, too! Unfortunately, though, our house isn't wired with any cables for phone or internet. I'm waiting for our cell phone provider to offer a separate hotspot for our area.

 

[FQLover]

I thought that the groceries were too high, also--and definitely thought that the utilities were too low.

Maybe it all comes out in the wash?

 

[tzolkin]

definitely thought that the utilities were too low.

Typically, phone and internet are considered utilities too. Perhaps they are categorizing those under entertainment or personal spending, but I think most people today would consider them necessities that they need for work/school and not under categories that I would consider like "fun money".

 

[DisneyMandC]

We have service providers adding lines to our area now, too! Unfortunately, though, our house isn't wired with any cables for phone or internet. I'm waiting for our cell phone provider to offer a separate hotspot for our area.

Ours was originally wired for home phone since it was built in 2000, but not internet. However, Verizon is allegedly going to run everything to our house, including down our quarter-mile driveway, for free. Comcast came through several years ago and wanted $7000 to run the cable line down our driveway

 

[ThereYouSeeHer]

Ours was originally wired for home phone since it was built in 2000, but not internet. However, Verizon is allegedly going to run everything to our house, including down our quarter-mile driveway, for free. Comcast came through several years ago and wanted $7000 to run the cable line down our driveway

We originally got a $7000 quote, too, but that was to come down our street. Now, they are coming on their own anyway (apparently, unless a neighbor paid for it!).

I think the pandemic (with students doing school at home) shed light on the fact that rural communities do not have access to the internet. There are now a number of federal and state grant programs that are pushing service providers to expand coverage. That, and I think more people are moving to rural areas, which makes the providers more willing to invest (it's just not worth it to them if there is a low population density). So, it's probable that Verizon will run your outside lines for free now. Yay!

 

[ThereYouSeeHer]

We do have trash, internet (sort of), and tv, which I bill out separately from utilities. So maybe Ramsey considers a lot of that lumped together under utilities?

Typically, phone and internet are considered utilities too. Perhaps they are categorizing those under entertainment or personal spending, but I think most people today would consider them necessities that they need for work/school and not under categories that I would consider like "fun money".

Yeah, the budget graphic was very basic, so I just checked their Every Dollar app.

It looks like they consider a phone to be under Personal, and things like cable internet/tv (and probably trash) to be utilities (which they merged under Housing in the app).

I know people love that app, but I have a hard time with anything other than my own spreadsheets!

 

[Starport Seven-Five]

Meal planning, cost cutting, it's tough. If anyone would be interested, I could make a thread for recipe sharing or something like that.

ChooseFi has a good page with budget recipes:
https://www.choosefi.com/2-meals/

I thought the grocery numbers were high, so maybe it is an accurate average for most families.

I thought that the groceries were too high, also--and definitely thought that the utilities were too low.

Maybe it all comes out in the wash?

I thought the same. Our grocery spend is below what they list for a couple and we aren't even trying. Our utiliity bills are much higher though.

These are our utility costs in Michigan on a 2300 sq foot house:
Natural gas: $109 (average over 12 months)
Electricity: $94.65 (average over 12 months)
Water/Trash: $45
Internet: $60
Cell Phone: $100

Something not mentioned is that the 15% savings rate is quite low IMO if you are starting saving later in life. You need to save ~43 years at that rate to have enough in investments to retire. That estimate does not include SS though so you would have some offset there.

source: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

 

[ThereYouSeeHer]

ChooseFi has a good page with budget recipes:
https://www.choosefi.com/2-meals/

Thanks!

Something not mentioned is that the 15% savings rate is quite low IMO if you are starting saving later in life. You need to save ~43 years at that rate to have enough in investments to retire. That estimate does not include SS though so you would have some offset there.

source: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Definitely. The 15% (Baby Step 4) is only supposed to be until you've started saving for college (Baby Step 5), and your home is paid off (Baby Step 6). After that (Baby Step 7), it's expected the percentage would increase.

Like you mentioned, if someone starts all this later in life, it does change the trajectory. However, the overall goal would be to enter retirement with no debt whatsoever, which would make social security (or any other investments) go farther.

 

[barkley]

We are in a similar situation. No water, sewer, gas, HOA, trash, home phone, internet, or cable/dish TV (we use an indoor antenna for whatever free channels we can pick up). Although it's nice having only an electricity and cell phone bill (we hotspot off of this for internet), we need to start saving for future maintenance and replacement costs (well, septic, etc.). We save money in one area to spend it in another, I guess!

We do have trash, internet (sort of), and tv, which I bill out separately from utilities. So maybe Ramsey considers a lot of that lumped together under utilities? Which I don't. I split trash service with my mom. Even if you take your own trash to the dump here, you have to pay for it. I'm not going to go through the hassle of that and still have to pay when I could have someone pick it up for me. We have what is basically a verizon hotspot separate from our phones, but they are actually installing verizon fios in my area now! We have directv for tv.

we also get charged for hauling our own trash but i found it costs less to opt out of traditional garbage cans to a dumpster w/ every other week pickup (and no having to haul the cans up and down a long driveway every week/run the risk some critter will get in/wind knocks it over).

cable/traditional internet service?no cable here-never will be due to the topography and environmental restrictions so if you want tv you either have satellite or stream which is impossible even IF you can get on the one and only company's terrible internet here (when people sell their homes and cancel theirs it's not a guarantee the internet company will let new owners on-and if you cancel and go to hot spot only to realize it's still not great due to our location/they go over their monthly allotment in the first week or two and try to go back there's a good chance you will be denied-they want to phase it out b/c it's so expensive for them to maintain). thank goodness we finally came up on the list for starlink (year and a half wait). if it's available to someone in a rural area it's well worth the equipment investment and monthly fee-it's the difference between night and day for internet access and streaming (we could cancel our satellite tv if we didn't want our local stations but we also can't access them with an antenna). that said-we still pay for landline in addition to our cell phone for emergencies. we've had weather totally mess with cell service so it's a necessity in our minds.

i'm glad not to have to pay for water and also not to be subjected to their restrictions (or crazy proposed well use restriction laws in other states-my brother may end up with the state he lives in installing a meter on his well and charging him a penalty for using more than the state sets as monthly max). septic.......oooooh, we had to do repairs a few years ago-it hurts to think about it.

 

[DLgal]

I'm always interested in other people's utility numbers. I live in the country so we don't have water, sewer, or gas out here. My house is all electric with a heat pump/central air. While I have a small house (1200 sq ft), it's poorly insulated. With two adults keeping the heat at 68 and the AC at 72, our monthly budget billing for our utilities is $114 a month. Some months it's much lower; it peaks around $200 a month in January and February. We live in Virginia so our electricity is controlled by the monopoly that is Dominion Power with no other electric options.

I think insulation, window quality, and your roof materials make a big difference. We live in a new-ish house (built in 2015) and it has amazing insulation, not much direct sunlight, UV reflecting windows and a reflective, cooling roof. It's a dual zone electric AC and gas heating. It's harder to warm our house than cool it due to the aforementioned windows and roof. In the winter, the house doesn't warm up naturally due to sun through the windows. We keep the heat off for the most part, unless the indoor temp drops below 65, then I turn it on set to 68.

In the summer, we put the AC at 68 at night and then 75 during the day. It usually won't even kick on until around 3pm, unless we are in a heat wave with early morning temps in the 90s.

We also have what I consider a fair electric and gas company. I find the rates to be very reasonable. San Diego Gas and Electric, just to the south of us, charges about twice what our provider does.

 

[hsmamato2]

Our utility prices have gone crazy around here...we heat with oil so that's what it is... it's electricity that's horrendous- our bill had alsway been in the $130 range usually, many of my friends bills have been $400+ (not joking) for months now (ordinary homes) and the rates just doubled last month..... I don't know what many of us are going to do with this but we're stuck with this one company. Right now my electric bill is running around $190/mo last I looked. our house is pretty efficient,and is about 1300 sf.

 

[DisneyMandC]

we also get charged for hauling our own trash but i found it costs less to opt out of traditional garbage cans to a dumpster w/ every other week pickup (and no having to haul the cans up and down a long driveway every week/run the risk some critter will get in/wind knocks it over).

cable/traditional internet service?no cable here-never will be due to the topography and environmental restrictions so if you want tv you either have satellite or stream which is impossible even IF you can get on the one and only company's terrible internet here (when people sell their homes and cancel theirs it's not a guarantee the internet company will let new owners on-and if you cancel and go to hot spot only to realize it's still not great due to our location/they go over their monthly allotment in the first week or two and try to go back there's a good chance you will be denied-they want to phase it out b/c it's so expensive for them to maintain). thank goodness we finally came up on the list for starlink (year and a half wait). if it's available to someone in a rural area it's well worth the equipment investment and monthly fee-it's the difference between night and day for internet access and streaming (we could cancel our satellite tv if we didn't want our local stations but we also can't access them with an antenna). that said-we still pay for landline in addition to our cell phone for emergencies. we've had weather totally mess with cell service so it's a necessity in our minds.

i'm glad not to have to pay for water and also not to be subjected to their restrictions (or crazy proposed well use restriction laws in other states-my brother may end up with the state he lives in installing a meter on his well and charging him a penalty for using more than the state sets as monthly max). septic.......oooooh, we had to do repairs a few years ago-it hurts to think about it.

We put in for Starlink as well. We were told it would be here this May, but my husband said he recently got a notification that it's been delayed a year. We'll have Verizon Fios by that point, so we're taking our names off the Starlink list. My uncle has it in very rural CO and says it's great!

I had to replace my septic pump two years ago, and I just know my well pump has to be on it's last leg.

I think insulation, window quality, and your roof materials make a big difference. We live in a new-ish house (built in 2015) and it has amazing insulation, not much direct sunlight, UV reflecting windows and a reflective, cooling roof. It's a dual zone electric AC and gas heating. It's harder to warm our house than cool it due to the aforementioned windows and roof. In the winter, the house doesn't warm up naturally due to sun through the windows. We keep the heat off for the most part, unless the indoor temp drops below 65, then I turn it on set to 68.

In the summer, we put the AC at 68 at night and then 75 during the day. It usually won't even kick on until around 3pm, unless we are in a heat wave with early morning temps in the 90s.

We also have what I consider a fair electric and gas company. I find the rates to be very reasonable. San Diego Gas and Electric, just to the south of us, charges about twice what our provider does.

We have a log cabin that's true log downstairs, so no insulation there. And before anyone says that true log provides the same level of insulation, yes, that would be true if the home was built properly The attic and upstairs are well insulated though, so the upstairs stays nice year round.

 

[barkley]

We put in for Starlink as well. We were told it would be here this May, but my husband said he recently got a notification that it's been delayed a year. We'll have Verizon Fios by that point, so we're taking our names off the Starlink list. My uncle has it in very rural CO and says it's great!

i would encourage you to keep your name on the list just in case your verizon isn't what you anticipate (or some issue comes up with the provider). all it will mean is starlink continues to hold on to your deposit (it's like $99 if i remember right) and if your name comes up and you don't want it then you just decline and get your refund. i say this b/c even if you get notified it doesn't mean that if you decline the availability in your area will guarantee availability if you change your mind after the fact. we've had people in our neighborhood that have been on the waiting list for over 2 years and when someone else sees that dish pop up on their roof they hop on starlink's site thinking it means they can get it-to find it's still a year or two's more wait b/c they are 'spreading the wealth' and only handing it out in bits and pieces in areas (though the rv hookup is easier to get and some neighbors are using these for their homes).

 

[Starport Seven-Five]

Definitely. The 15% (Baby Step 4) is only supposed to be until you've started saving for college (Baby Step 5), and your home is paid off (Baby Step 6). After that (Baby Step 7), it's expected the percentage would increase.

Like you mentioned, if someone starts all this later in life, it does change the trajectory. However, the overall goal would be to enter retirement with no debt whatsoever, which would make social security (or any other investments) go farther.

That is good to hear regarding the percentage increase. I've only seen the generic "build wealth and give" for step 7 without much specifics. If he is encouraging people to increase their savings rate under that umbrella, it would be a smart move.

I didn't consider that step 5/6 did have some additional savings built in so the assumptions in that graph are incorrect (it was assuming save 15%/spend 85%). If people transition to saving those amounts after they complete the steps they should be in good shape.

 

[ThereYouSeeHer]

Our car insurance is up for renewal, and while I'm researching changes we might make, I wanted to drop this article link for anyone who may be interested.

How Much Car Insurance Do I Need?

When it comes to any insurance, it's easy to feel the weight of those premiums in your day-to-day budget. However, Dave's insight has been helpful to grasp the bargain of exchanging hundreds of your own dollars for potentially hundreds of thousands or millions of your insurance company's dollars.

It seems Dave recommends at least $500,000 in combined auto liability insurance. For example, bodily injury liability of $250,000/$500,000 and property damage liability of $100,000, would equal $600,000 of total liability coverage.

Bodily injury liability of $300,000/$300,000 and property damage liability of $100,000 would be a total of $400,000 liability coverage.

Relying on required state minimums may leave you underinsured. As you work through the Baby Steps, it's important to continually reevaluate and increase coverage to protect your growing wealth.

 

[ThereYouSeeHer]

No change in Baby Steps for us, but we still had a productive month.

-Even though we finished Baby Step 3 last month, we decided to take our tax refund along with other money, and save an extra month in our Emergency Fund. We also opened up a high yield savings account and put the EF in there.

-We finally got around to submitting a rate verification form with our energy company. Our house is all electric, but since it wasn't listed as such, we were paying a higher rate. The form was processed, and now our energy rate has been lowered.

-Since we are working on Baby Step 4, we went ahead and grabbed our online Social Security accounts to see where we stand.

-Increased our auto insurance coverage to align with required minimums for future umbrella insurance.

-Bought and read Dave's Total Money Makeover and Baby Steps Millionaires books. TMM is classic Dave, but BSM was the more interesting read for our current journey.

-Saved money by repairing our washer ourselves. Turned out to be a clogged inlet screen, which was an easy fix!

-The discussions here about monthly food bills helped me reevaluate how much we spend. I was pretty sure we could save $100 a week, if I committed to meal planning dinner and other meals better. I told the family if we could be cautious about what gets thrown in the cart (mostly individual, pre-packaged meals and snacks), we can split the $100 savings each week as personal cash. It worked! This month, we've been able to reduce our daily grocery spend from $40 per day ($280 per week) to $25 per day ($180 per week). This is back to our pre-pandemic spending amounts. This will be an ongoing group effort to see if everyone would rather have weekly personal cash or extra money for food.